The last few years have created many changes around tax deadlines. This year federal returns are due by April 18th unless an extension is filed. Maryland returns have been extended to July 15th due to COVID and the hardships of Maryland taxpayers.

For many of you, opportunities to affect your 2021 taxes have passed, but there are a few opportunities still left. If you want to make an IRA or Roth IRA contribution, this must be done by April 18th. Remember, an IRA contribution will help lower your taxes for 2021, but the future value at retirement will be taxable. The Roth IRA contribution will not be tax-deductible, but like the IRA, a Roth IRA will grow tax-deferred. Unlike the IRA, the Roth IRA and its growth will not be taxed in retirement when you take the money out. If you think you will be in a lower tax bracket in the future, maybe use the IRA, but consider the Roth IRA if you think you are in your lower tax bracket years now. Remember that even though we may hate our current tax levels, there have been times in history when tax levels were even higher.

Many of you will use the standard deduction, but if you think you have adequate deductions for itemized deductions on Schedule A, make sure you have all of your documentation in place to back up any deduction you wish to claim. For example, have you documented all of your charitable deductions? 

Now is also a great time to begin thinking about 2022 taxes. Are you having enough tax withheld to avoid penalties? Do you hope to make charitable contributions this year? If so, how much and how old are you? If you are 70 ½ years or older, you may be able to make contributions directly from your IRA and further save on some taxes. Also, if you have low basis stock or mutual funds, consider gifting the shares to avoid capital gains on those gifts. Next, if you are still working, does your company have a retirement plan? Are you maximizing your contributions and making sure to get the maximum employer match (free money)?

Regardless of your answers, consider consulting with your CPA on specific tax questions and consider consulting a Certified Financial Planner (CFP®) practitioner if you want to review the best options for retirement or other future goals.